Economic Development in the Tourism Sector Discussion

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dfy1997

Business Finance

Description

First:

you will examine the political and economic policies of your chosen country and determine if your country is "hospitality friendly" to foreign hotel investment.

Please consider:

What economic or political barriers (such as stability, travel advisories, recent terrorism, strength of economy) to travel and tourism investment are in evidence in your chosen country?

What economic or political forces encourage international investment (financing, creation of infrastructure, other government incentives)?

Overall, on a scale of 1 to 5 (one being not at all friendly, 5 being extremely friendly), how tourism and hotel development friendly is your country of choice? Please give a reason for you answer.

Second:

Complete a PESTEL analysis for hotel and tourism development in your chosen country using the form template attached below.

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PESTEL Analysis What are the political, economic, sociological, technological, environmental, and legal elements that impact the global hotel industry? Element Political Economic Sociological Factor Impact (help or hurt?) Technological Environmental Legal
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Explanation & Answer

please find the attached files

Running Head: MANAGEMENT QUESTION

Management Question
Student’s Name
University Affiliation
Course Name and Number
Instructor’s Name
Assignment Due Date

1

MANAGEMENT QUESTION

2

Iran is one of the top 20 countries possessing the highest number of tourism attractions in
the world. Iran is among the 19 UNESCO designated world heritage sites. For instance, it has the
2500-year-old ruins of Persepolis. In the year 2014, approximately 63 million people visited Iran.
However, out of the 63 million, only 5 million of them came from other countries ("Investment
opportunities in tourism industry of Iran," 2016). Most of the tourists arrived from Afghanistan,
Azerbaijan, Iraq, Pakistan, Turkey, and Turkmenistan. Very few came from developed countries
such as Europe. Although Iran has several tourism destinations, tourism to 2.3% of the GDP.
This data depicts that Iran’s tourism industry does not perform effectively (Golghamat Raad,
2019, p. 1).
There are various factors political and economic that have contributed to Iran's current
tourism predicament. First and foremost, to date, sanctions imposed on Iran have harmed
economic growth. These sanctions have prevented foreign investors from doing business in Iran.
These sanctions have greatly discouraged investment in the tourism industry. Although some
sanctions have been lifted, making it easier for EU investors to invest in Iran, the position
remains the same for U.S. companies and individual investors. Although Iran has excellent
potential, several challenges are evident in the tourism and hospitality sector. The absence of
greenfield sites in Iran's major cities has caused land prices to increase rapidly. Elevated land
prices have significantly discouraged investors from venturing into Iran's tourism and hospitality
industry (Khodadadi, 2016, p. 91).
In most countries, most of the private sector's economic activities are greatly influenced
by security and political stability. Iran is no exception. Social unrest and rapid change of
governments greatly discourage foreign direct investment. One of the barriers to Iran's economic

MANAGEMENT QUESTION

3

prosperity is insecurity resulting from the governments and the many revolutions that such
governments have previously been exposed to.
Although the political situation is much better now, investors are still hesitant to invest in
Iran. The lack of firm judicial security has also played a massive role in the slow investments in
Iran's tourism and hospitality. Since the war between Iraq and Iran, there has been negative
imagery of Iran, particularly Western countries. Currently, the media portrays Iran as a heavily
politicized country. Many people are unaware of the culture and the nature of people in Iran. Iran
also lacks adequate political support for investment. In most countries, the private sector is
known to invest the most. However, the private sector in Iran is not strong enough. Economic
grievances in the country have also resulted in numerous protests in the country. Most Iranians
are not contented with the current economic status of the country. There is a lot of job insecurity,
unpaid wages, and poor working conditions. Considering Iran's historical background, many
investors are skeptical about investing in such a country (Khodadadi, 2016, p. 91).
Some several factors or forces encourage international investment. Government stability
is one of the most important factors to consider when deciding on foreign direct investment. A
stable government is imperative for any investment. For instance, most of the investors willing to
invest in a country such as Iran will always check to see if Iran's government is supporting
investments. Proactive measure taken by the government is another important factor that
determines investment in a foreign country. The best countries to invest in are those whose
government undertakes proactive measures such as developing highways and providing
incentives to new businesses. Tax policies and concessions are other essential factors to consider
when planning to venture into a foreign market. Heavy tax duties discourage foreign direct
investment. The stability of the exchange rate also encourages international investment.

MANAGEMENT QUESTION

4

Governments should ensure the domestic currency does not drop abnormally. The exchange rate
should always remain more or less around the same level as it was at the time of investment
(Kumari & Sharma, 2017, p. 662).
On a scale of 1 to 5, I would give Iran a 3 in regards to tourism and hotel development
friendly. The lifting of sanctions has made Iran a place to invest, especially in the tourism sector.
Although there are a number of barriers to investing in Iran, the government is making progress
in improving the state of the tourism sector in Iran. Currently, all activities related to tourism
enjoy a 100 percent tax holiday between five and 13 years, depending on the particular area. The
government has also made numerous attempts to extend Visas's time period on arrival in Iran.
Currently, Iran has only two leading hotel operators. Therefore, there is still a huge market for
investors to tap into ("Investment opportunities in tourism industry of Iran," 2016).
Pestel Analysis of Iran
Element

Factor

Impact (Help or Hurt)

Political

Previous political disagreements with other

Hurt

countries have led to significant problems in
the tourism industry. For instance, sanctions
against Iran have had damaging effects on
the country's tourism. Although sanctions
have been lifted, the tourism industry is not
yet in a good position.
Economic

The lifting of sanctions and tax holidays has
encouraged direct foreign investment in the
tourism industry.

Help

MANAGEMENT QUESTION
Sociological

Most people in the tourism industry don't

5
Hurt

know how to deal with tourists.
Technological

Absence of modernized ...


Anonymous
Really great stuff, couldn't ask for more.

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